Regulatory Update on Private Student Loans

April 09, 2013

A 2012 report from the Director of the Consumer Financial Protection Bureau and the Secretary of Education found that, as of the end of 2011, more than $8 billion in private student loans were in default and that even more were delinquent. This growing problem has not slowed down investors as more than $4 billion of private student loan asset-backed securities were issued in 2012. This year through February, dealers sold $5.6 billion of private student loan asset-backed securities, and the demand for the riskiest tranche of an issuance by Sallie Mae in late February was reportedly 15 times greater than the supply. On the other hand, lawmakers appear more concerned; several have introduced legislation to reform the U.S. Bankruptcy Code to allow borrowers to discharge their private student loans. Now, in another effort to address the issue, the CFPB has requested information from market participants, consumers, and other stakeholders on how to promote private student loan modifications.

Read “Regulatory Update on Private Student Loans.”